This Morning: iPhone Bloodbath on the Street, Cheers for RFMD, Nokia

By Tiernan Ray

Here are some things going on this morning in your world of tech:

Shares of Apple (AAPL) are down $27.56., or 6%, at $467.08, after three different analysts cut their ratings on the shares to Neutral this morning and others cut estimates and price targets, mostly because yesterday's announcement at Apple's Cupertino headquarters failed to produce an iPhone at a price the Street was hoping for, implying Apple may be willing to cede market share.

UBS's Steve Milunovich was among the three cutting the stock to the equivalent of a Hold from a Buy, along with Credit Suisse and Merrill Lynch. This morning he writes that Apple “lacks competitiveness in key growth markets,” and that the higher-than-expected price on the iPhone 5C is “a head-scratcher.”

“We surmise that even if Apple secures a partnership deal with China Mobile in the near term, it will be challenged to compete against comparable Android (4-inch, quad-core) devices priced 40-50% lower than the iPhone 5C.”

Meantime, the evening came and went without a peep about a deal with China Mobile, although a report this morning by Matt Cinch, Eunice Yoo and Bo Gu of CNBC states that Apple wad granted a permit to operate on China Mobile's network, citing a document uploaded by China's Ministry of Industry and Information Technology.

Some Apple partners are also suffering today, even if the Street took a kinder view of them. Shares of ARM Holdings (ARMH), which is expected to get a boost because Apple is using ARM-based chips in 64-bit mode for the first time in a phone. But ARM stock is off 60 cents, or 1.3%, at $46.60. And shares of Invensense (INVN ), the maker of sensor parts, which may ultimately have a part in the iPhone 5S, are down 19 cents, or 1%, at $18.

Mark McKechnie of Evercore Partners wrote in a note overnight that the “motion co-processor” in the iPhone 5S was positive for INVN, because it “shows the consumer importance of advanced motion sensing” and he sees “a likelihood for some INVN content in the form of a discrete 3-axis gyro[scope].”

Shares of wireless chip maker RF Micro Devices (RFMD) are down 2 cents at $5.46 despite an upgrade this morning by Raymond James's Steven Smigle to Strong Buy from Market Perform, with a $7 price target, in anticipation of multiple wins in power amplifier and other parts.

“We think RFMD is in a strong position to react to customer demands given its improving relationship with customers, particularly in envelope tracking and carrier aggregation, both of which are becoming increasingly important.”

Shares of Nokia (NOK) are up 22 cents, or almost 4%, at $5.88, after Merrill Lynch's Didier Scemama raised his rating on the shara to Buy from Neutral. I don't have a copy of Scemama's report, as Merrill refuses to distribute research to reporters, but I'll offer details if and when they become available.

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In a report published Wednesday, Bank of America analyst Didier Scemama upgraded the rating on Nokia Corporation (NYSE: NOK [FREE Stock Trend Analysis]) from Neutral to Buy, and raised the price target from $6.19 to $7.07.

In the report, Bank of America noted, “We upgrade Nokia to Buy and increase our revenue and EBIT forecasts for 2014/15 by 5/9% and 32/28%, reflecting a more bullish view on the top line for NSN and Advanced Technologies. The risk profile of new Nokia is very different to the handset-focussed Nokia of old, and we see limited potential downside in our bear case to €4, whilst in our bull case we see c60% potential upside to €6.68. We estimate that new Nokia is capable of >€0.35 in earnings power. Our €5.33 [US$7.07] PO is based on an 11x earnings multiple (15% discount to Ericsson's 5yr average, 20% discount to current), to which we add back the excess net cash that we believe could be returned to shareholders (€1.53/share). Our new PO would value Nokia on 0.88x EV/Sales (2015), which we believe is conservative given the 11.8% operating margins we forecast for 2015, vs the current 0.58x EV/sales.”

Remember when Apple, used to, come out with a product and you would say to yourself -"Wow that is pretty *#*#@ Sleek".......?????

When was the last time that happened?

Now you have "bloggists" telling you that Johnny Ive has given you 5 colors and different color "swiss cheese" cases to give you "24 ways to express your individuality".....

In other words, the bloggists are now telling you why "Apple is still cool"....

Sad days in Cupertino indeed....
Steve must be

SEPTEMBER 11, 2013 12:07 P.M.

Tiernan Ray wrote:

Samuel Johnston: Thanks for your help!

SEPTEMBER 11, 2013 12:35 P.M.

tamoem wrote:

Tim Cook doesn't care about investors, customers or market share. He only cares about product lines and margins. If total revenue and earnings tank he doesn't care as long as he make margin, he'll buy back stock, the board will issue large blocks of RSU and the Apple executives will be rich, HFT and Options traders will be rich - apple customers and investors will walk away much poorer!! It's not an investment it's a trade for the professional. Look at GE; BA; HON; or F ... forget apple it's the next Microsoft or maybe worse the next blackberry killed by Google and Samsung!

SEPTEMBER 11, 2013 2:24 P.M.

technomonster wrote:

ray, ray, ray,
remember when Nokia was around $2 and GS, MS, RBC, BMO, Bernstein all had Nokia going bankrupt?

Now it looks like when the deal gets done in Spring, Nokia will be sitting on $10 billion in net cash. On top of that, they will do about $1.5 billion in annual profits and offer a special dividend. Perhaps they will even re-instate their annual dividend.

How do you like those Apples? Ray?

SEPTEMBER 11, 2013 2:33 P.M.

Anonymous wrote:

Downgrading Apple. How dumb can you get. The company is still capable of being a growth stock. Plus they are the best tech company hands down.

Wall Street scratching their head? How about picking their bum?!

Where's our daily Blackberry article. Much more satisfying to kick their butt around. That includes you freddysrevng.

SEPTEMBER 12, 2013 2:17 A.M.

Cathy wrote:

Pennystockchief is a dotcom site through which information and analysis helped me change my trading behaviour for NOK stock and has resulted in positive trading

About Tech Trader Daily

Tech Trader Daily is a blog on technology investing written by Barron’s veteran Tiernan Ray. The blog provides news, analysis and original reporting on events important to investors in software, hardware, the Internet, telecommunications and related fields. Comments and tips can be sent to: techtraderdaily@barrons.com.